PRIVATE SECTOR VIEWS ON ASEAN CAPITAL MARKETS INTEGRATION

Transcription

1 PRIVATE SECTOR VIEWS ON ASEAN CAPITAL MARKETS INTEGRATION US-ASEAN Business Council Financial Services Working Group ASEAN Capital Markets Forum (ACMF) Annual Meeting September 26, 2012 Singapore

2 Representatives Daniel Vanderkemp, ACE Group Amit Sheopuri, Citigroup James Shipton, Goldman Sachs Jason Yates, Morgan Stanley Catherine Simmons, State Street Kathy Santillo, US-ASEAN Business Council

3 Macro-level Perspectives ASEAN capital markets integration is a critical infrastructure component of the ASEAN Economic Community (AEC) Development of ASEAN as a global asset class is timely in the current global environment Creation of an enabling environment for financial innovation and new products ASEAN s regional capital markets development processes can be strengthened by prioritizing actions that address gaps in confidence in areas such as liquidity, governance, hedging, legal solvency rules, reference rates, clearing and settlement rules by both external capital and domestic capital (like pension funds and insurance) investors and market players. Importance of developing a consistent policy architecture; growing markets are increasingly interconnected and evolution of policy making from silos to holistic based approaches is critical. Expand coordination between ACMF s efforts with other ASEAN regional initiatives in areas like insurance cooperation and the ABMI Opt-in approach to regional visions may present challenges in ascension and unintended consequence of fragmentation in the long-run

4 Micro-level perspectives Asia s bond and derivatives market are still nascent compared to (and a fraction of) the US/EU Build and use pools of capital (pension and insurance pools, develop derivatives, securitization of repo markets) to grow ASEAN s capital markets Considerations of systemically important financial institutions in ASEAN ASEAN s Insurance sector has made the least progress in evolution of regional ratings or recognition from the national on shore rules Bond listing documentation requirements for ASEAN local currency bonds all still national based even in terms of language rules are written in. Tax structures for firms seeking to operate across borders is under developed Recognize the complimentary roles of banking, insurance, non-bank financial companies in providing integrated services across the spectrum of risk and balance sheet strength. Important to utilize agreements once agreed, i.e. ASEAN Plus Standards.

5 Products and Services Progress the cross-border CIS initiative. Consider the cross-listing of ETFs from within the region and beyond. Develop a uniform approach to custody. Introduce securities lending. Important to make progress in harmonization in individual ASEAN countries on cross border issuance and streamlining of post trade settlement and clearing. Further development of local currency government and corporate bond market - Important to make progress in harmonization in individual ASEAN countries on cross border issuance and streamlining of post trade settlement and clearing.

6 Recommendations for the ACMF in 2013 Can ACMF serve as a regional coordination for financial sector regulation, such as ASEAN-wide licensing rules and reciprocity of recognition; enable cross-border documentation to enable movement of industry professionals. Can ACMF be empowered to be a regional mutual recognition agreement driver? Can ACMF drive the increased use of global standards FSB, IOSCO, EMEAP, etc. in the standards adopted in ASEAN s regional initiatives? Can ACMF inform/drive processes to reform tax processes to facilitate ability of firms to do business across borders? Can ACMF deepen linkages with ASEAN partners (e.g. Japan, Korea, Australia for initiatives like the CIS scheme) to promote greater harmonization across the region and bigger markets? Can ACMF encourage ASEAN countries to adopt FATF and OFAC requirements including global standards for KYC (know your customer) and AML (Anti-Money Laundering) to attract institutional investors?

7 Where can USABC-FSWG be a partner Share a set of cross border documentation keys that if adopted would unleash private sector responses. Provide cross cutting training in new product areas like ETF s and securities lending to get these new products into markets. Encourage the US Treasury to provide assistance to ASEAN states to adopt global best practices standards to meet requirements of institutional investors. Serve as a private sector sounding board and help organize platforms & venues where ASEAN can articulates its perspectives to international stakeholders on global financial regulatory reform initiatives on such topics: Intended and unintended consequences on financial sector growth emerging markets and developing economies. Impact of extraterritorial provisions on liquidity.

8 Thank you! Contact information for US-ASEAN Business Council staff: Marc Mealy, Vice President Policy, Kathy Santillo, Regional Managing Director, Daniel Wu, Manager Financial Services,